Wine takes an edge over beer.
For years, the Associated Beer Distributors of Illinois (ABDI) has been one of the most successful lobbies at the Illinois Statehouse.
The victory that comes immediately to mind was when ABDI teamed up with Mothers Against Drunk Driving to prevent direct sales of out-of-state wine to consumers. The argument then was that underage kids could buy their booze using that ever so scary Internet. I wrote at the time that the odd coalition was one of the most ingenious legislative plays I’d ever seen.
But if you’ve read the papers lately or watched TV news you’ve seen that the beer guys are getting hammered for picking on the state’s nascent wine-growing and wine hospitality industry. The wine industry, it turns out, has finally started to turn the table on the beer distributors.
What it all comes down to is that the US Supreme Court ruled last year that states may not, “ban, or severely limit, the direct shipment of out-of-state wine while simultaneously authorizing direct shipments by in-state producers.” Illinois law allowed Illinois wineries to bypass distribuors by shipping some wine directly to consumers and retailers but banned the practice by out-of-state wineries — which happens to be the law passed by the beer distributors and MADD several years back.
In response, the beer distributors introduced legislation that would slap a limit of two cases per month on out-of-state wineries — the same limit in place for Illinois wineries before the Supreme Court ruling. Then, as all lobbies do, they went further overboard in their initial legislation by requiring that the first wine purchase had to be face-to-face. You couldn’t just surf the Internet and buy a couple of cases of wine from Gallo unless you’d previously been to the Gallo winery and bought a bottle.
The Illinois wine industry howled that the beer distributors were trying to put them out of business. The media has been eating it up ever since, particularly in southern Illinois, where the winery boom began. The region has been full of articles and editorials about the “David vs. Goliath” battle. Most editorial boards don’t have a lot of sympathy for what they believe to be parasitical middlemen who make large campaign contributions, and they’re in love with the idea of little wineries dotting the state’s landscape. The once hugely effective “minors will buy wine on the Internet” argument has also fallen completely flat.
Except there’s more to this than the news media is telling you. The wine industry also went overboard with their own initial bill.
The wineries’ proposal greatly increases the amount of wine that Illinois wineries could ship directly to retailers. While the amount of wine they were allowed to produce was doubled, the amount of wine they could ship directly to retailers was quintupled.
The beer, wine and spirits distributors aren’t happy with anything that bypasses them, of course, but they claim last year’s Supreme Court ruling would mean that the big out-of-state wineries could take full advantage of that proposed direct shipping language to send thousands of gallons of wine to WalMart and other big retailers. And they say that beer and hard liquor makers could also use the loophole to bypass them as well. Since few Illinois wineries are even large enough to ship that proposed increased amount of wine, the opponents claim the language was probably intended to apply to the big out-of-state wineries, brewers and distilleries in the first place.
Also ignored in every media report so far is the fact that many small Illinois wineries that use Illinois grapes wouldn’t have been able to ship wine directly to consumers if the wine industry’s own bill had passed as written. Oops. A wine industry spokesman said recently that the bill would be amended, but the beer distributors point to the rather large omission as “proof” that this legislation is all about a power play by the big wineries out West and has nothing to do with Illinois’ winemaking industry.
That’s also an overstatement, however. The wineries’ legislation would allow many Illinois wineries to open up ten “tasting facilities” each, up from the current limit of two. Those facilities could be a real profit center for Illinois winemakers, but the distributors are opposing this idea.
There is plenty of room for compromise on both sides, but the massive favorable publicity they’re getting means the wineries definitely have the upper hand here.
Rich Miller also publishes Capitol Fax, a daily political newsletter. He can be reached at thecapitolfaxblog.com.